Like other organizations, banks are trying to come to grips with big data: a vast amount of data coming from many sources at a faster rate. At the SWIFT Operations Forum Americas conference in March, David Saul, senior vice president and chief scientist at State Street Bank, made an interesting point. He said he thinks in terms of “smart data”, which encompasses not only volume, velocity and variety, but also value.

Big data is problematic for banks when it comes to regulatory reporting. They have to calculate and report aggregated risk positions to multiple agencies, and they’re going to spend billions of dollars annually doing it. This exercise would be easier and more cost efficient if reports could be produced in the same format and transmitted in the same way to all regulators globally.

Pulling information from disparate systems and platforms that have no knowledge of one another is a challenge. However, banks can use semantics to connect data in one place to data in another place in a similar fashion to the Internet. Essentially, semantics allows the data from the sub-units in an organizational hierarchy to be connected along with the meaning.

To this end, the Enterprise Data Management (EDM) Council has been working to create the Financial Industry Business Ontology (FIBO). A key piece of FIBO is the Legal Entity Identifier (LEI), which uses semantics to create a common identifier for a logical entity. A few years ago, the EDM Council began a collaborative effort to turn FIBO into a standard that maps to business needs and contains the correct meanings and relationships. An outgrowth of this initiative is the Smart Regulation subgroup, which is focusing on ways to standardize regulatory reporting.

By bringing data together with the semantic models, banks can prepare regulatory reports much quicker. Once the data is brought together, it doesn’t have to be mapped again, which saves time and money. Moreover, banks can start to query the same big data to make smart strategic decisions that ultimately generate revenue.